King: Alpharma rebuffs a $1.4 billion buyout bid

King Pharmaceuticals Inc. said Friday that rival Alpharma Inc. has rejected a $1.4 billion buyout offer but indicated it is prepared to take the bid directly to shareholders in a move to expand its product offerings.

The Bristol, Tenn.-based drugmaker disclosed the $33 a share offer publicly for the first time on Friday. It said the offer was rejected by Alpharma, following a letter to that company's board of directors on Aug.4.

“Having thoroughly reviewed all relevant aspects of King's proposal in consultation with its financial and legal advisors, … Alpharma's board of directors has determined the nonbinding proposal to be not in the best interests of Alpharma shareholders,” the company said in a statement.

The bid amounts to a 37 percent premium over the $24.04 closing price of Alpharma's common stock on Thursday, but represents a 49 percent premium based on the Aug. 4 timeline.

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“We continue to prefer to work together with you and your board to complete a negotiated transaction, and we are prepared to commit all necessary resources to do so,” King Pharmaceuticals' chairman, president and chief executive, Brian Markison, said in a letter to Alpharma's president and CEO, Dean Mitchell, on Aug. 22. “If we are unable to negotiate a transaction, we are prepared to take this offer directly to your stockholders.”

In an interview Friday, Markinson said King views Alpharma's more dominant animal health products unit as fuel to help further build a promising pain products franchise and would allow it to continue operating as it has been.

“It adds a nice bit of diversification to King's portfolio at the end of the day,” he said.

But the potential of Alpharma, he said, is in the pharmaceutical sector. And with King expecting to launch its newest pain drug in 2009, an Alpharma buyout would provide the necessary sales force.

Alpharma received most of its revenue from animal health products. Still, the bulk of its pharmaceutical sales are related to the morphine painkiller Kadian, which reached $167.7 million in 2007. Another pain treatment, the Flector Patch, was launched in January.